How Important is It to Stick to a Budget?

How to Plan a Budget for Your Business

The number one question we get asked is how to set up a budget. Many business owners have accountants that catalog and summarize their financial data, but they have no idea how to make heads or tails of what it all means. Or they have a bookkeeper that helps them record all their transactions, but they have no idea how much money they need to move forward with a new project. When it comes to budgeting, you can’t look at things as accounting services vs bookkeeping services. Instead, you have to see how the two services can help you. By utilizing the best of both options, you’ll be able to establish a consistent budget for your business. So how do you do that?

• Goals: Before setting out on any budgeting journey or quest, you have to figure out your goals. Do you want to have money saved up for benefits within the next year? Do you plan on buying someone out? Understanding your financial goals in the terms of your business will help you understand other aspects of your business. 
• Analysis: Once you know your goals, you need to go through your finances. Figure out where all your money is coming from. Then figure out where all your money is going. What are you spending the most money on? What are you spending the least amount of money on? This is when professional bookkeeping services for businesses can be incredibly beneficial. 
• Outline the Costs: Now that you know your goals and the state of your finances, it’s time to start putting pen to paper, so to speak. What we mean is it’s now time to begin figuring out the costs of your goals. How much money are you going to need to pay for better benefits? How much money will you need to save to buy someone out? As soon as you have those numbers, you can set tangible goals to begin working towards them. 
• Create: Setting those tangible goals is the first step in creating your budget. Taking into consideration your past income, expenses, and savings, you can create a budget that will help you reach the initial goals that you set. This is essentially a formal document that outlines everything so your business is financially successful. 

When you need reliable bookkeeping services, turn to Don R. Walker, C.P.A.. We are the experts you can trust to help you determine a tangible budget that will work for your business. Call us today to learn more.

Frequently Asked Questions

• What is budget analysis?
  • This is the process of closely examining the means of income as well as expenditures within your business. The goal is to figure out where the money is coming and going from so you can better allocate resources where they are needed.
• What are the 3 types of budgets?
  • In a nutshell, the three types of budgets are a balanced budget, surplus budget, and a deficit budget. It will depend on your situation and what your business needs are that will determine which of these options is best for you. 
• What are the advantages of budgeting? 
  • The main benefit is knowing what you can afford and what you can’t. That might seem simple, but that’s the beauty of a budget. Knowing what can and can’t be afforded will help you make decisions in other areas of your business. 
• What is meant by budgeting?
  • By definition, a budget is a formal statement estimating the income and expenditures of a business. What is meant by budgeting is determining where all the money is coming and going and how what is left over can be properly allocated to the correct areas of your business. 
• What is the main purpose of budgeting?
  • Ultimately, the main purpose is to refine the allocation, use, and coordination of funds within your business. You may have a good idea of everything, but a true budget will help you see exactly where all your money is coming from and going.